Tuesday, Oct 04, 2011
(This story was originally published Monday.
RIYADH (Zawya Dow Jones)--A joint bid by Kingdom Holding (4280.SA) and Bahrain's Batelco to buy 25% of Zain KSA (7030.SA), estimated to be worth as much as $1.2 billion, failed due to disagreements with the Saudi telco's lenders, its chairman said Monday.
"The firms didn't withdrew their bid. The banks refused to transfer debt guarantees from Zain Group to the Kingdom-Batelco alliance," Zain Saudi Chairman Prince Hussam bin Saud told Al Arabiya television.
"The lenders think that Zain Group has a stronger financial ability to meet its debt obligations," he told the Dubai-based channel.
Kuwait-based Mobile Telecommunications Co., or Zain Group(ZAIN.KW), guarantees 52% of the Saudi telco's $3.1 billion debt, he said, adding that the lenders include Credit Agricole, Al Rajhi Bank, Riyad Bank, and Banque Saudi Fransi.
Last week, Zain Group said that talks with Batleco and Kingdom over the Zain KSA stake had ended, and said it "looks forward to assisting Zain KSA" in the development of its mobile telecommunications business in the kingdom in the future.
The failure to strike an agreement over Zain KSA is the latest in string of "almost deals" within the region's telecoms sector. Back in March, U.A.E.-based Emirates Telecommunications Corp. (ETISALAT.AD), or Etisalat, the region's biggest telecom provider by market value, ditched a near-$12 billion plan to buy 46% of Kuwaiti rival Zain.
In April, Zain Group signed a non-binding term sheet with Batelco and Kingdom to sell its 25% Zain KSA holding, a deal seen by some as worth around $1.2 billion.
Analysts had previously said that any stake sale deal would be complicated by issues such as management fees structure, debt guarantees currently provided by Zain Group, shareholder subordinated loans to Zain KSA as well as other contingent liabilities of Zain KSA.
Zain KSA, which began operations in Saudi Arabia in March 2008, said in February it will put forward a new capital reorganization plan to shareholders as it looks to wipe out accumulated losses and eventually raise fresh cash to support its expansion plans.
The firm's chairman said that after the joint bid failed, Zain Group is no longer considering selling its stake in the Saudi firm, which will focus instead on speeding up its capital restructuring plan.
-By Summer Said, Dow Jones Newswires; +966-546-842373; summer.said@dowjones.com
(END) Dow Jones Newswires
04-10-11 0406GMT
